Anthony Williams D.C. mayor
Former Mayor Anthony Williams, now with the Federal City Council, chairs the city's Tax Revision Commission. Credit: Darrow Montgomery/file

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A big-time developer, a fiscally conservative former mayor, a few well-connected lobbyists, and some economists walk into a conference room. Is there any reason to think they’ll walk out with an equitable tax plan for D.C.?

That’s what a growing swath of D.C.’s left-wing groups are wondering as they keep tabs on the city’s Tax Revision Commission, a specially assembled panel of experts meant to guide D.C.’s future tax policy. The group’s recommendations won’t be ready before the Council passes the 2024 budget that lawmakers are debating now, but they will surely have an outsize influence on leaders’ long-term plans for coping with the myriad ways COVID has reshaped the economy.

And that’s why the recent rhetoric of some of the TRC’s 11 members has become so concerning to D.C.’s more progressive budget watchers. Lawmakers are unlikely to take up any major tax changes this year, but if commercial real estate values keep declining and eating away at the city’s property tax revenues, they’ll likely need to do something to reorient how D.C. funds its government. But the TRC, stacked with representatives of the business community and political establishment and chaired by mayor-turned-business booster Anthony Williams, could recommend against any tax hikes that would impact big companies or wealthy residents and provide cover for Mayor Muriel Bowser’s recent turn toward austerity.

“In spite of the clear mandate to center racial equity in the TRC purposes and outcomes, commissioners have made concerning public comments that demonstrate an unwillingness to increase taxes on the wealthy, antipathy for business regulations, and contempt for D.C. residents that struggle to make ends meet,” a coalition of 35 of the District’s leading progressive groups, including the Fair Budget Coalition, Empower DC, and Washington Legal Clinic for the Homeless, write in a letter to the TRC released Tuesday. “Labor and grassroots organizations are missing completely from representation on the commission, while powerful business interests are at the table and overrepresented.”

Muriel Bowser Kevin Donahue Jenny Reed budget
Mayor Muriel Bowser presents her 2024 budget alongside City Administrator Kevin Donahue and budget director Jenny Reed. Credit: Darrow Montgomery

A variety of D.C. progressives watching the commission’s meetings have been noting commissioners’ comments with alarm for months before this Tax Day missive and forwarded them to Loose Lips. For instance, in March, Gregory McCarthy, the top lobbyist for the Washington Nationals and a former Williams aide, said outright that “I don’t have any appetite” for raising taxes and wondered whether the city could “target some relief to those sectors that we think would be the job drivers.” David Catania, the former councilmember and current lobbyist, similarly mused at an October meeting that “we need to spend as much time trying to create wealth as we do trying to redistribute it,” not exactly the most subtle way to argue against a progressive tax structure.

“Unlike other cities and states, the competition is so close by,” Jodie McLean, the politically connected head of Union Market developer Edens, said at the TRC’s March meeting, raising the distinctly dubious threat of tax flight. “Is it a foregone conclusion we have to raise revenues?”

It’s probably no great surprise to see this kind of talk among commission members considering its composition; Bowser got to appoint five members, and she picked Catania, McLean, Williams, attorney James Hudson, and Carolyn Rudd, a past board chair of the D.C. Chamber of Commerce. Council Chairman Phil Mendelson picked the others, and while his selections were slightly more ideologically diverse, he only picked one true progressive in Erica Williams, head of the DC Fiscal Policy Institute. Mendo also named McCarthy; Rahsaan Bernard, president of Building Bridges Across the River; Yesim Taylor, executive director of the DC Policy Center; and Rashad Young, Bowser’s former city administrator and current Howard University lobbyist. D.C. Chief Financial Officer Glen Lee rounds out the group as an advisory member.

The question is what kind of report they’ll ultimately deliver to Bowser and the Council; Nick Johnson, the TRC’s executive director, tells LL the current plan is to have something ready by the end of the year.

“They could either pass a conservative fever dream report that has the wish lists of these big business lobbyists…or they could try to do something more tempered that strikes an even-handed approach of looking to create equity in the tax code and not trying to put the finger on the scale for certain industries or businesses,” says Sam Rosen-Amy, who has been watching the TRC closely and was chief of staff to former At-Large Councilmember Elissa Silverman, a leader among the Council’s left wing when she served.

Commission members insist that even-handedness is their goal, and that tax increases are far from off the table. Taylor, a former staffer in the CFO’s office before launching the D.C. Policy Center with the influential Federal City Council’s backing, tells LL she expects “a combination of revenue raisers where the economic base is strong and revenue reductions where the economic base is weak” among the group’s final recommendations. (Williams is the executive director of the Federal City Council.)

In fact, Taylor expects the city’s economic situation will grow so precarious in the coming years that some tax increases will likely be unavoidable—Metro’s looming $700 million budget deficit alone will require “the city to collaborate with the other jurisdictions to find some funding,” which could come in the form of new regional taxes, she says. Add in a loss of federal COVID relief funding and further declines in property tax collections, and Taylor expects the city will have to get creative.

“We’re talking about big, big, big dollar amounts here,” Taylor says. “It’s not $30 million here, $20 million there, it’s hundreds of millions of dollars disappearing.”

Johnson notes that the commission has already drafted up a broad range of ideas for the group to consider, and those include everything from tax breaks to tax hikes (even more progressive ideas like increasing the capital gains tax rate and a tax on “extreme wealth” made the list). His ultimate goal is to see a report that is “something that lots of folks across the spectrum can buy into,” focusing more on “what is the right mix of taxes?” for the city to assess versus how high rates must be.

He also cautioned that the group won’t be touching thorny, yet related questions about things like government spending or regulations (and that’s probably good news for nervous lefties, considering that Catania, McLean, Rudd, and Williams all railed against the dangers of overregulation in the commission’s October meeting, which helped set off alarm bells among the progressive set).

Former Councilmember David Catania

Still, some activists can’t help but wonder if this group will really take the prospect of tax hikes on the wealthy seriously, considering it would directly affect many of their clients (not to mention their own pocketbooks). Some of the TRC’s dismissive attitude toward hearing from the public has also rubbed advocates the wrong way. In October, Williams complained of the “de rigueur” process of seeing “the regular suspects come in with their pre-scripted remarks,” while Catania referred to the prospect of allowing public comment as part of the city’s “rich tradition of open-mic nights” where “no good deed goes un-waterboarded.” Johnson observes that the TRC has outlined plans for a series of public hearings through the summer, including one specifically for progressive groups on Friday, but those previous comments have spurred fears that the group won’t take criticism seriously.

“We raised revenue two years ago from our highest-income earners, individuals who make a quarter-million dollars or more a year, and some folks screamed bloody murder about a really modest increase,” says Mat Hanson, chief of staff for DC Action, one of the groups to sign the letter to the TRC. “And so I think we have to be prepared for something like that, even when we’re asking folks to pay their fair shares.”

There’s nothing binding the Council to listen to the commission, of course, and the body’s leftward tilt over the past few years suggests it might not be the most receptive audience to more conservative recommendations. Once the TRC delivers its report, it’s completely up to the mayor and Council to take its recommendations or discard them.

But past experience suggests that leaders will give serious deference to the TRC as they craft the fiscal year 2025 budget and more. The city has established four such commissions dating back to 1977, and all of them have been generally embraced by past mayors and Councils; the most recent commission, which wrapped up in 2014 and was also chaired by Williams, inspired changes like cuts to the income tax for middle-income earners and a higher threshold for the imposition of the estate tax. Even the hotly debated “yoga tax,” an increase in the sales tax rate for gyms and health clubs that Mayor-for-Life Marion Barry once confused for a “yogurt tax,” was included among the commission’s recommendations.

This latest edition of the TRC has already earned plenty of public deference too. In the debate over the tax on high-income residents that Hanson references, detractors like Ward 2 Councilmember Brooke Pinto urged her colleagues “give the Tax Revision Commission a chance to do its job” before making any tax changes. D.C. Chamber of Commerce CEO Angela Franco made a similar plea in a March op-ed, citing the city’s uncertain financial situation, while Mendelson told reporters in April that he’d be “hesitant” to fiddle with tax policy until the commission issues its report.

That rhetoric could evaporate in a flash, of course. Rosen-Amy notes that Mendelson proposed a tax on digital ad sales late in the budget process a few years back, only to withdraw it under intense pressure. But progressives see every reason to start gearing up for a fight now so as not to be caught off guard.

“It’s going to be really important to see how the Council reacts to these recommendations,” Hanson says. “And that’s what they’ll ultimately be: recommendations.”